Advertisement & Promotion

Just how important is Advertisement and Promotion?

Wednesday, March 13, 2013

One of the four P’s of the Marketing mix is “Promotion” which though usually mentioned last after “Product”, “Price” and “Place”, it would tend to get equal or even bigger budget than the others. eMarketer predicts the Mobile and Out of Home (OOH) advertising alone will exceed 14 billion USD in 2013. Typically companies spend about 10% of their revenue on advertisement and promotion.

Advertisement and promotion is becoming so important in the Marketing domain so much that many Marketing functions today has been reduced to just that. Marketing managers spend most or all of their effort in this field.  These managers are seen as advertising managers due to their over emphasis on advertising with far less attention to customer satisfaction, market accessibility and pricing strategy which is either orphaned or pushed to sales or operation functions.

Promotion may be the fuel in generating sales especially during the introduction phase of a product lifecycle. It may make sense to do so seemingly because what other better means to introduce a new product than a classy product launch and top it up with a celebrity endorsement to create the market appeal. Considerable amount of money is also spent to maintain that product positioning in the rest of the product lifecycle phase.

But just how important is Advertisement and Promotion in today’s consumer market? Forrester found 73% of consumers trust family and friends for purchasing decision. I wrote the Power of Word of Mouth in an earlier blog illustrating why the market is shifting to community marketing where purchase decision is driven by users experience.

Well-thought and crafted words on billboards, media and mobile advertisement may play a key role in introducing new product or company to the market. It can help consumer put a mental picture in their minds about the existence of a new product.  Such flashy advertisement may help in creating interest in consumers to consider alternatives from what they have been using currently.  But how far does this go?

Promotional efforts such as product launch may help potential users to test the product and provide them the opportunity to know about a new product better.  It could as well give prospects a feel about such new product that drives them to make purchase intention.

But hang on! Between purchase intention and purchase decision, there are two factors that intervene (Kotler 1994). Un-anticipated situational factors such as events that happened unexpectedly could abruptly change a consumer’s decision. Consumer forms a purchase intention based on stable lifestyle such as expected income, expected price or expected benefit of a product.  When a consumer is about to buy, un-anticipated situational factors may disrupt the purchase intention. For example a purchase intention to buy a new car will take a sudden change in decision when you just learned that you have lost your job.

Another key factor that fill between the purchase intention and decision is the attitudes of others around you. It is essentially the influence of another person that has a bearing on your purchase decision. The extent to which another person’s attitude reduces your preferred choice depends upon how intense that person’s view is and your motivation to comply to this person’s view. The other person could be a family member, friend, colleague, neighbour and even total stranger.  

You may have experienced countless situations that may have implicated you or others in such situations. You have done all extensive research about a certain brand of say a car and may have done test drives to strengthen your choice.  However, all that research and test drive will become meaningless when a person that have an influence on you tells you otherwise about your choice of the brand because of that person’s personal experience.

Companies tend to overlook at the existing customers experience for their overzealousness in pursuing new customers. Time and again business have failed to understand that consumers don’t make decisions in a vacuum. Decisions are made through the connected network of people. This is even more so in the information age. 

Purchase decisions are arrived upon complex cognitive steps from self-research to word of mouth that strengthens or weakens a brand choice.  So continuously satisfying the existing customer is equally, if not more important than satisfying a new customer. Companies need to strive on finding ways to identify their customers’ post purchase satisfaction and attempt to improve any poor perceptions held.

While advertisement and promotion will continue to play a key role in the marketing mix, the efforts may go as far as attracting new customers to purchase intention. To close this with a purchase decision, companies will need to put equal or even more importance in building positive experience among their existing customers.

Satya Narayanan